San Diego

It’s easy to understand why most discussions about the state of venture capital investing paint a pessimistic view. Access to institutional equity dollars is increasingly limited for new entrepreneurs and early stage companies, and an anemic fundraising environment for VC firms is contributing to the long-anticipated “VC shakeout.” We’re also at a cyclical low in reported M&A events and the IPO window isn’t as open as we all would like, stretching out the time to exit.

But it’s not all bad. In fact, now is actually a great time to be a later-stage growth company seeking capital.

If your company is two to five-plus years into its venture investment cycle and generating meaningful revenue with a somewhat clear path to profitability, chances are good you’re getting tons of inbound investment interest from growth equity firms, foreign investors, and strategic partners, as well as inside investors.

Yet many growth-stage companies I talk to mention a mismatch between management expectations on valuation and/or the amount these new equity investors are looking to put to work. Any slug of equity will create ownership dilution, and these investments often require companies to spend aggressively to accelerate growth. Entrepreneurs weaned on capital efficiency—especially through the Great Recession—often prefer to grow at a more managed pace rather than take on significant equity infusions.

Enter Venture Debt

Traditionally used to extend early stage runway or finance hard assets, the last few years have seen venture debt become an increasingly prevalent source of cost-effective growth capital for later-stage, venture-backed companies. Venture debt financing takes the form of a secured term loan, but one that gives companies as much flexibility as equity because there are few to no strings attached (read: covenants) about how a company can use the capital.

Unlike growth equity investors that need to own a specific percent of the cap table or deploy a minimum amount of capital to make their risk/return profiles work, venture debt investors have no such requirements. This creates a natural match between venture debt financing and growth-stage companies in which even a few million dollars of growth capital—be it to ramp sales and marketing, develop complementary business units, create a war chest for opportunistic strategic acquisitions, or expand internationally—can serve as a significant valuation force multiplier.

Venture Debt by the Numbers

Statistics on venture debt are hard to come by, but my colleagues and I found that in 2012 alone, more than 280 companies obtained $2.01 billion in venture debt financing from over 20 non-bank venture debt firms. Include some conservative assumptions about the number of non-bank venture debt transactions that went unannounced, and we estimate that well over 350 companies received non-bank venture debt financing in 2012.

As venture debt has evolved to serve growth-stage companies, the size of venture loans also appears to have increased considerably. For the universe of transactions we’ve analyzed, the average announced venture debt financing in Q4 2012 reached $8.2 million, up from $4.7 million in 2007. … Next Page »

After 27 years as an unobtrusive specialist in satellite-based communications, Carlsbad, CA-based ViaSat (NASDAQ: VSAT) is acquiring a much bigger footprint.

While ViaSat has experienced plenty of success over the years, the company’s business has been focused mostly on its low-profile military and intelligence-agency customers. But that began to change in 2011 with the successful launch of ViaSat-1, the world’s highest capacity communications satellite, which provides commercial broadband Internet service (at 140 gigabits per second) in key U.S. regions. Carlsbad announced plans to build ViaSat-1 in 2008, and acquired WildBlue Communications, a suburban Denver company providing high-speed Internet service, for $568 million in 2009.

Mark Dankberg, ViaSat’s chairman and CEO, laid out his grand strategy for me a few years ago, and the results were evident in record financial results reported last week. For the fiscal year that ended March 29, ViaSat said its new commercial Exede Internet services—which are still based in suburban Denver—have become the biggest factor driving the company’s growth.

“We are closing out the year with revenues surpassing the $1 billion mark, coming [in] at $1.1 billion for fiscal 2013, which reflects a $256 million increase [30 percent] over the prior year,” Shawn Duffy, ViaSat’s chief accounting officer, told investors and analysts in a conference call.

ViaSat-2 Satellite (artist's concept)

ViaSat added about 44,000 subscribers in the quarter, ending March with a total of 512,000 subscribers for its satellite-based Internet service—including nearly 300,000 subscribers on ViaSat-1, with an estimated total capacity of 1 million subscribers. That’s a big jump since March, and to boost subscriber growth even more, the company unveiled long-awaited plans to build and launch a second satellite, ViaSat-2, through an expanded partnership with Boeing.

Using new technology architecture, ViaSat says the second satellite would provide enough capacity for an additional 2.5 million subscribers—and cover seven times the geographic footprint of ViaSat-1. The new satellite, which is scheduled for launch in mid-2016, would cover North America, Central America and the top of South America, and all of the Gulf of Mexico and the Caribbean—as well as the primary airline and maritime routes between the U.S. and Europe. ViaSat already has established partnerships to provide satellite-based Internet service for United Airlines and JetBlue, with ViaSat-1 service for JetBlue passengers beginning this summer.

Internet service could be a particularly attractive added value on trans-Atlantic flights. As Dankberg told analysts and investors: “Everybody with a mobile device would use it…We can take advantage of our bandwidth effectiveness to drive the cost down to … Next Page »

Most successful entrepreneurs will tell you that the fastest way to kill a startup is to hire the wrong people. It’s true. As someone who has helped build multiple startups, I cannot overstate the importance of assembling a stellar core team. They are the ones who will transform your ideas into reality, and help you achieve your vision.

So, how difficult can it be to assemble a strong team? Most startups tend to focus on hiring the smartest, most qualified people around. But the truth is that sometimes, companies with the best talent and IQ flounder and fizzle out because their employees couldn’t work well together, or because they were undisciplined or unreliable, or because they just weren’t driven enough. So, as important as it is to hire people with talent and expertise, it is equally important to look out for certain other traits as well.

Here are some of those traits that I believe every startup should identify in prospective employees in order to build the best possible team:

Passion and Drive

In a startup, you need people who are willing to go that extra mile, and the only way they’ll do that is if they are passionate about what you’re trying to achieve. People excel when they care about what they do. So find someone who shares your enthusiasm for the organization’s goals and vision, and is driven to do what it takes to get there. No one should have to be micromanaged. Once you throw the ball to them, they should be able to take it forward – just like one of our project managers at MetricStream did. For eight years, he was extremely proactive about identifying what needed to be done, and then getting it done well. For example, recruiting strong talent is hard when you don’t have a recognized brand, especially on an international scale. Prospective employees felt his passion and excitement, allowing him to not only build a stellar team, but deliver market-leading solutions to our customers. Today, he is a well-respected executive vice president at MetricStream, managing 400 people.

A “Never-Say-Die” Attitude

The road to success in a startup is long and hard. Most of the time, there is much more unknown than known. And at every turn, seemingly insurmountable challenges and obstacles will greet you. So hire employees that display the resilience to meet these challenges and pressures head-on. No doubt, mistakes will be made, plans will not work, and setbacks will occur. But your team should be able to bounce back quickly, and deliver results.

When I was at IBM, we had a product with major quality problems. Customers were returning these products left and right, which caused the sales people to lose their commissions. However, there was one sales representative that didn’t have any customers return the product. He overcompensated by being extremely attentive and responsive to his customers, ensuring repair service personnel were proactive. He refused to let this product issue affect his business.

Flexibility and Adaptability

Working in a startup means improvising, and doing more with less. Often, it involves reworking and revising business models and strategies multiple times. Evaluate whether prospective employees will be able to adapt to this dynamic business environment without getting overwhelmed or frustrated.

Apart from these traits, look out for employees who are open and willing to step outside of their comfort zones, and take on responsibilities outside their core tasks. When we were facing challenges with our sales model at MetricStream, and needed to improve our win rates, we asked our CFO to take over sales. Although he had never led a sales organization before, he had the skills and competitive nature to drive success. He took on the new role willingly, and built a strong sales organization that over-achieved its targets.

Trust and Collaboration

The lack of effective teamwork has ruined many promising startups. When choosing a team, it’s important to identify people who cooperate and communicate well, resolve differences of opinion quickly and mutually, and count on each other for support. It’s just like in football: when a quarterback throws the ball in the air, they are throwing to an empty space, and they trust their receiver will get there and catch the ball before it falls to the ground. Teammates who trust and rely on each other are better positioned to execute ideas faster and more effectively.

Openness to Taking Risks

Risk and opportunity are two sides of the same coin. If your startup wants to effectively capture new market opportunities, your team must be willing to take the risks necessary to get there. That being said, your team should also be able go in there with eyes wide open—they must make calculated decisions by fully understanding the implications of the risks that lie ahead.

Conclusion

Building a startup is a lot like entering into a long-term relationship, so hire people whom you think will stick by your side through thick and thin. And remember—the relationship has to be mutually beneficial. If you want to attract and retain good employees, offer them good salaries and benefits that are important to them (i.e. healthcare, emotional/social rewards or flexible office hours).

Finally, if you want a good team, put it at the top of your strategic agenda. Many startups tend to focus more on other pressing issues such as finding investors, paying bills, or building a customer network. The truth is that hiring employees is your most important task because it can make or break your company. Invest substantial time and effort, and give it the importance it deserves, and it will surely pay off in the long run.

Biotech industry conferences are happening, somewhere on this green Earth, every day. If you’ve been around a while, and you’ve attended a few, chances are you get invitations, or marketing pitches, that ask you to attend a different meeting every day.

If you’re new to the business, you may not be on all the lists. But if you want to advance, you want to network with the big fish who attend these meetings. You want to find out where the action is, and where it’s going.

So then the question becomes: Which conferences should you attend?

Before I dive into my own calculus on meetings, let me just say there’s a good reason for all this activity. Even though the Internet has created a historic advance for connecting people and ideas, it’s not enough. Human beings still have to meet each other face-to-face to form the relationships we need to understand each other, and do business. So we agree to carve time out of our busy schedules, spend some dough, and sometimes get on airplanes for a few industry conferences every year.

Each person has to have their own specific criteria for what makes an event worthwhile. But I think Stewart Lyman, a frequent  contributor to Xconomy, spoke for a lot of people when he said a couple years ago “when I go to meetings, I want to learn something new, gain a wider perspective, and do a little networking.”

Simple, right?

Now, if you’re a biotech CEO or a chief financial officer, you are probably on the road constantly in search of money at one banking conference after another. I don’t really know the differences between the various conferences put on by UBS, Cowen, or Goldman Sachs, so I won’t try to size them up.

But I do make it my business to go to a lot of conferences each year to stay current on who’s who and what’s what in biotech. I have my own personal set of questions I ask to help me sort through them. Will I learn something new there that will help me gain insight? How many people will be there? Are there going to be a lot of newsmakers there that I already know and want to stay in touch with? Are there newsmakers there that I haven’t met, and want to meet? Will I have to travel far? How much time and money is this going to take? Will it fit into my schedule? How many competing media outlets will be there? If there are too many, that’s bad, because I don’t want to be just another guy writing the same story that 10 other outlets have. One of my credos is that man can’t live on commodity news in the Internet age.

So how does this play out in reality? I figured it would be fun to do a quick rundown of a few major conferences on the calendar, with a short explainer on why I chose to attend it, or skip it.

Here goes:

JP Morgan Healthcare Conference. This convention is held in San Francisco’s Union Square every January. This is the granddaddy of all biotech industry conferences, having been around for more than 30 years. All the top executives in biotech and Big Pharma are there, along with the major venture capitalists, fund managers, Wall Street analysts, and media. You spend marathon days inhaling facts, claims, aspirations, wishful thoughts, and half-baked predictions. Then you spend all night socializing on the cocktail party circuit (inside tip: drink lots of water, not wine, unless you want to keel over from dehydration). I go every year, and would never consider skipping it.

American Society of Clinical Oncology. Many readers will be shocked to hear this, but I haven’t personally attended the ASCO meeting since I was for working for Bloomberg News in 2007. I cover cancer news aggressively, and this is the biggest single event for cancer news of the year, held every June. But it’s also a hype-a-palooza dominated by other media who have been around longer, and have more readers, than Xconomy. I figure I can spend four days of time and $2,000 of hard-earned money roaming Chicago’s McCormick Place to compete in a massive echo chamber, or I can selectively cover a few ASCO stories from my office, do them as best I can, and use the rest of the time to zig when other media zags, giving my readers something they won’t find anywhere else.

Life Science Innovation Northwest. This conference is the biggest biotech industry conference in the Northwest, held in July in Seattle. It’s local, so this one is easy to attend. I always make sure to say hello to my existing contacts, meet some new people, and squirrel away a few story ideas that I can publish later. Readers who think Seattle is Timbuktu might want to take a closer look. The region is going through a biotech slump, for sure, but there’s more here than many realize.

OME Precision Medicine Summit. This event was assembled at UC San Francisco earlier this month, and led by chancellor Susan Desmond-Hellmann. I had a chance to attend part of this, but skipped it, because of travel and schedule conflicts. I’m kicking myself for missing it, because this looks like it was a great meeting, full of interesting people pushing hard to advance meaningful reforms to the way drugs get developed, and treatments get tailored for patients.

Xconomy events. Duh, these are a must-attend. Need I say more?

Biotechnology Industry Organization convention. BIO’s annual convention is always a mixed bag for me. I skipped it this year for a few reasons. One, it was … Next Page »

I was pretty slow about getting around to reading Thinking, Fast and Slow. The career-capping book by Princeton psychologist Daniel Kahneman, one of the founders of behavioral economics, spent months on all the bestseller lists back in 2011. I finally picked up a paperback copy a couple of weeks ago.

The book is mainly about the limits of intuition and the biases—seemingly built into the way the human mind has evolved—that keep us from acting in accord with logic, rationality, and statistics. For example, the “anchoring effect” means we’re highly suggestible when it comes to numbers and prices. No matter how much soup they really want, grocery-store customers buy more when there’s a sign saying “Limit 12 cans per customer.”

It was Kahneman’s studies of such impulses that won him a Nobel Prize in economics in 2002. Together with Amos Tversky, Richard Thaler, and many others, Kahneman overturned economists’ old picture of society as a mathematical utopia in which individuals act rationally to maximize their own utility. Thinking, Fast and Slow is a lengthy, detailed, yet approachable summary of that revolution. You’ve probably seen or read popular behavioral-economics boks like Steven Levitt and Stephen Dubner’s Freakonomics or Dan Ariely’s Predictably Irrational; those are like sugary desserts next to Kahneman’s protein-packed tome.

As I absorbed Kahneman’s points about all the ways human judgment breaks down under various stresses and distractions, I couldn’t help looking for lessons that might apply to the high-tech circus we insiders sometimes call, in a self-congratulatory way, the “innovation ecosystem.” By which I mean the researchers and developers who incubate new technologies inside universities, corporate labs, and garages; the entrepreneurs who turn these new ideas into products; the angel and venture investors who place bets on the entrepreneurs; and the eager customers who fuel the whole process.

And such lessons abound. Indeed, entrepreneurs, executives, and investors are prone to so many kinds of errors that they almost seem to be Kahneman’s favorite subspecies of homo economicus. In the end, I think Kahneman’s observations about bias lead to a big puzzle about the nature of entrepreneurship and technological progress. But before I get into that, I’ll relate a few examples from the book—each one richly supported by the psychological experiments and surveys conducted by Kahneman and his colleagues over the last three decades:

1. The illusion of understanding: If we can fit past events into a satisfying story, we think we understand what really happened, and we can’t imagine things turning out any other way. Here Kahneman cites the example of Google, which was started by two Stanford graduate students who lucked into one of the biggest untapped markets in the history of business (i.e, search-based advertising) and came out looking like invincible geniuses. In fact, there were numerous points at which Google’s story could have taken a drastically different turn—such as 1999, when Page and Brin were willing to sell the company for $1 million but the buyer thought the price was too high. But luck took them in a different direction. “A compelling narrative fosters an illusion of inevitability,” Kahneman observes.

2. Outcome bias: Closely related to the illusion of understanding, this is the tendency to reward or blame decision makers for the performance of their organizations, even though the correlation between leadership quality and corporate performance is generally low. “We are prone to blame decision makers for good decisions that worked out badly and to give them too little credit for successful moves that appear obvious only after the fact,” Kahneman writes. “Leaders who have been lucky are never punished for having taken too much risk. Instead, they are believed to have had the flair and foresight to anticipate success, and the sensible people who doubted them are seen in hindsight as mediocre, timid, and weak.”

3. The illusion of pattern: Kahneman thinks we’re far too willing to ascribe meaning to events that are the product of pure chance. A basketball player who sinks three or four baskets in a row is seen as having a “hot hand,” and a CEO who oversees several successful product launches or acquisitions acquires a reputation for extraordinary insight or skill when in fact, like Page and Brin, he was probably just fortunate. “We are far too willing to reject the belief that much of what we see in life is random,” Kahneman warns.

4. Nonregressive explanations: An outstanding performance is likely to be followed by a mediocre performance. This isn’t backsliding: it’s usually just regression to the mean, the tendency of variables to gravitate around a historical average. The concept is well established, but because we’re hard-wired to seek causal rather than statistical explanations, we have a hard time accepting it. One corollary is that we shouldn’t punish a company that fails to follow up a stellar product with an even more stellar one (the iPad and its regrettable sequel, the iPad mini, come to mind). Another is that all extreme predictions are unreliable; we shouldn’t believe any entrepreneur who says his company is the next Google.

5. The illusion of validity, also known as the illusion of skill: We’re strongly influenced by the world in front of our eyes, and unwilling to admit that there’s much we don’t know—a phenomenon that Kahneman calls WYSIATI, for What You See Is All There Is. As a result, we come to believe—sometimes fiercely—that our own predictions are accurate, even when it wouldn’t take much digging to show that they’re little better than … Next Page »

[Clarification 5/17/13, 2:05 pm. See below.] Right on the same line with the original lede so you don’t waste space on a carriage return…Antibody drugs seemed to be the topic of the week for San Diego’s life sciences community. We have the latest updates from RuiYi, AnaptysBio, and Optimer Pharmaceuticals, along with other developments.

—Ambit Biosciences’ (NASDAQ: AMBI) stock price fell by 61 cents, or almost 8 percent, in its first day of Nasdaq trading—after the San Diego biotech cut the price of its IPO to $8 a share from an estimated range of $13 to $15 a share. Ambit still managed to raise about $65 million in its debut by increasing the number of shares offered from 4.6 million to 8.1 million. Ambit’s venture investors include OrbiMed Advisors, Aisling Capital, Apposite Healthcare, Forward Ventures, GIMV, GrowthWorks, MedImmune Ventures, and Roche Ventures.

—Senté, a San Diego skin care “cosmeceutical,” said it raised $2.1 million in a Series B round of financing that included new and existing biotechnology investors. Proceeds from the financing will help Senté expand its development capabilities and commercial operations, and extend its product line of medical grade skincare products. In a statement, Senté co-founder and board member Kleanthis Xanthopoulos said, “Our new investors share our vision of creating unique science based dermatological products that will have profound impacts on the skin.”

—San Diego-based RuiYi, a biotech founded in 2007 as Anaphore, laid out what a spokeswoman described as a  “ménage a quatre” (household of four) collaboration to advance its … Next Page »

AnaptysBio says today the U.S. government has asked the San Diego biotech to produce antibodies that counter the deadly effects of ricin and would not require refrigeration, so batches of anti-ricin antibodies could be stored at room temperatures.

Under a contract funded by the Defense Threat Reduction Agency (DTRA), AnaptysBio says it is obligated to deliver anti-ricin antibodies to the U.S. Army’s Edgewood Chemical and Biological Center, a Maryland-based agency regarded as the U.S. bulwark for chemical and biological defense. Financial terms and other details of the contract were not disclosed.

Ricin was known as a deadly toxin long before the bizarre incident in Mississippi last month that led authorities to arrest a former taekwondo instructor for trying to frame an Elvis impersonator by mailing ricin-laced letters to President Obama and other officials.

Federal authorities are clearly giving ricin special consideration as a kind of “gateway” agent of bioterrorism. Ricin is derived from the castor bean plant, a common ornamental that can be easily grown, and it is easier to make than other biological agents that are far more deadly, such as anthrax or botulinum toxin.

Soligenix, a specialized biotech in Princeton, NJ, has been working to develop a vaccine that could be used to immunize people against ricin exposure. According to the Soligenix website, however, so far there is no drug or vaccine that can be used to protect against ricin exposure or to reverse the effects after exposure.

Hamza Suria

AnaptysBio was founded in 2005 to advance technology for rapidly producing antibody drug candidates that have been optimized for specific targets. The company has established drug development partnerships with Merck, Roche, Novartis, Celgene, and Gilead, and has worked with the Pentagon’s Defense Advanced Research Projects Agency (DARPA) to develop room-temperature antibodies that could be used in biosensors to detect biological agents.

“What’s been key to those relationships is the value we bring in being able to generate antibodies, and to do it in a rapid manner,” AnaptysBio CEO Hamza Suria told me by telephone. The company’s platform for generating antibodies, known as SHM-XEL, also has the capability to produce super-charged antibodies that not only bind to a target but activate functions—to boost the immune system or to dampen the immune response.

In addition, Suria said AnaptysBio can generate antibodies that bind in multiple places, as well as antibody drug conjugates capable of carrying a compound, such as an anti-cancer drug, which are absorbed into a cell after binding.

In its statement today, AnaptysBio says its contract to supply anti-ricin antibodies grew out of its successful completion of multiple biodefense-related antibody programs with DARPA.

San Diego’s Ambit Biosciences cut the share price of its planned IPO by nearly half yesterday, but still managed to raise about $65 million by increasing the number of shares in its debut offering. Shares of the biopharmaceutical company began trading this morning on the Nasdaq under the symbol AMBI.

The company, with a lead drug candidate under development for treating acute myeloid leukemia (AML), adjusted its IPO to offer 8.1 million shares at $8 a share, according to an amended IPO filing yesterday. Ambit had planned to offer 4.6 million shares at a price between $13 and $15 per share, according to previous filings.

The company granted underwriters a 30-day option to purchase up to 1.2 million additional shares to cover any over-allotments. Ambit also had plans to raise an additional $25 million from a concurrent private placement.

Ambit was founded in 2000, and has focused on discovering and developing molecules that block the cellular pathway for certain kinases—enzymes that activate cellular functions. Some kinases have been identified as key drivers of cancer, autoimmune, and inflammatory diseases. Ambit’s lead drug candidate, quizartinib (AC220), is a once-daily, orally-administered, potent and selective inhibitor of FMS-like tyrosine kinase-3 (FLT3) and is under clinical development for patients with an aggressive form of AML.

It’s been almost two years since Paul Grayson was named as CEO of San Diego’s Anaphore—more than enough time for the former Fate Therapeutics CEO to put a new strategy in place.

The company unveiled the first element of its new plan in October—shifting the focus to developing new biologic drugs in China, changing its corporate name to RuiYi, and acquiring worldwide rights to a novel monoclonal antibody for treating rheumatoid arthritis. Earlier this week, RuiYi revealed a deal with CMC Biologics (based in Bothell, WA, and Copenhagen, Denmark) to develop a cell line for producing the monoclonal antibody, dubbed RYI-008.

Today, the San Diego-based biotech says it has entered into a third partnership with Shanghai-based Genor Biopharma to advance development of RYI-008 through clinical trials in China. Details about milestone payments and other terms were not been disclosed.

Grayson explained by phone yesterday that the deals encompass a globe-spanning, four-party partnership (among RuiYi, arGEN-X, CMC Biologics, and Genor BioPharma) that has set out to collectively commercialize novel biologic drugs in China to treat autoimmune diseases and cancer. At a time when most biopharmas in China are focused on developing generic drugs and biosimilars, Grayson says RuiYi has taken a riskier approach by targeting wholly new biological and molecular compounds.

RuiYi’s predecessor company was founded in San Diego in late 2007 to advance new technology for creating genetically engineered protein drugs, with the potential to bind more tightly than traditional antibodies do with their cellular targets. But Grayson said it became clear … Next Page »

Fresh off raising $265 million to bankroll its ninth fund, Atlas Venture has forged strategic partnerships with Amgen and Novartis to help supply the bigger companies with innovative new drug candidates. The deals represent the latest in a string of alliances that is bringing venture firms and Big Pharma closer together than ever before.

Cambridge, MA-based Atlas announced today that it has struck what it calls “corporate strategic partnership” agreements with Amgen (NASDAQ: AMGN) (through its VC fund, Amgen Ventures), and Novartis (NYSE: NVS). According to Atlas partner Bruce Booth, both pharma giants are “significant” limited partners in Atlas’s latest fund, Atlas IX, which is expected to create at least 15 biotech companies.

Through those agreements, Atlas, Amgen, and Novartis will essentially work together to build biotech startups without locking them into transactions that cap their value.

Here’s how a partnership for a theoretical company would work, according to Atlas’s Booth. Atlas would scout out an interesting drug development platform or therapeutic from academia and seed finance it with around $500,000—or more, with the financial help of Amgen and Novartis—to validate the academic findings. If Atlas is convinced after a six to 12-month period that the technology works, it would put together a $10 million to $15 million Series A round to turn the idea into a company and pursue the next set of experiments needed to gather convincing evidence to support the platform, or various new drug candidates. Amgen or Novartis could be part of that financing round if they choose, but have no contractual obligation to do so.

Amgen and Novartis, in fact, won’t get any specific transactional rights or equity stakes in the companies that get created. Instead, they will give advice and feedback during the creation process and get the closest seat to watch those companies grow. Amgen and Novartis can then decide, as the startups mature, to eventually license a product if there’s a piece they like, or bid to acquire the entity altogether down the road.

“During that whole time Novartis and Amgen would really have a close proximal view of the scientific progress of those companies and at some point may say, ‘You know what? We like that enough that we’d like to integrate that into our R&D portfolio,’” Booth says. “That would certainly be a successful outcome for us and for [them].”

Atlas has between six and 10 seed-stage companies in Atlas IX already, all of which the firm has been actively communicating with both Amgen and Novartis about. The idea from here is to “cherry pick the ones” that are worth progressing into fully-invested companies, according to Booth.

The partnership is the latest in an … Next Page »

Carlsbad, CA-based Sorenson Media CEO Peter Csathy tells me he’s left Sorenson to become CEO of Manatt Digital Media Ventures, a venture fund and digital media business created by the Manatt, Phelps & Phillips law firm in Los Angeles.

The venture will operate as part of Manatt Digital Media, making the California law firm a one-stop shop for full-service legal and business consulting services for clients in entertainment, advertising, and digital media industries. Csathy, a serial entrepreneur and one-time media lawyer “will draw upon his experience as a successful operator and media industry executive to provide strategic business counsel, mentoring, deal-making, and evaluation of potential opportunities,” according to a statement from the Manatt law firm.

Csathy’s move might lead to good things for Sorenson, though. Csathy says he will continue to serve on the board of Sorenson Media, and is actively involved in the search for a new CEO. The founder and former CEO, Jim Sorenson, will serve as interim CEO during the search.

Manatt Digital Media plans to leverage its industry relationships with clients that range from entertainment industry “superstars” and public media companies to startups and growth-stage technology companies. Manatt says its clients “will benefit from the firm’s unrivaled access to artists, deal-making prowess and proven litigation experience, focused on protecting innovation, defending brands and mitigating risk.”

Before joining Sorenson, Csathy led several high-growth digital media ventures, including SightSpeed (acquired by Logitech in late 2008), MusicMatch (acquired by Yahoo in 2004), and eNow (acquired by AOL-TimeWarner in 2006).

Streaming media has grown exponentially in recent years, and providers of online video technology have shifted to providing cloud-based online video platforms. Sorenson has grown under Csathy—the company now has strategic partnerships with Shutterfly, Sony, Avid, and RealNetworks. But such rivals as Brightcove, Ooyala, and Kaltura continue to account for a big share of an increasingly crowded market.

While Sorenson operates its own successful managed video hosting and delivery technology, Csathy has written that it is only one component of Sorenson’s overall business model, which is focused on providing comprehensive video encoding and transcoding for enterprise customers.

“Think of us as a video-focused Accenture,” Csathy wrote in a 2011 Sorenson blog. “Enterprise customers come to us with real significant and challenging problems; we are consultative in our approach; we listen; we hear; we propose a solution to meet those needs; we build it; and we manage and service it; THAT is who we are.”

The online world can be a dangerous place for the unprepared. And it’s just going to get worse. It’s time to teach cyber security as integral part of the high school and college curriculum and to all corporate employees.

I grew up in New York City and for a few years heaven on earth for me was going to Boy Scout camp in the summer near the Delaware River. The camp had all the summer adventures a city kid could imagine, hiking, fishing, canoeing, etc. But for me the best part was the rifle range. For a 12-year old kid from the city shooting target practice and skeet with a .22 rifle meant being entrusted by adults with something you knew was dangerous—because they were beating gun safety into our brains every step of the way.

From the minute we walked onto the shooting range to even before we got to touch a gun, we learned basic rules of handling weapons I still haven’t forgotten. You screwed up and you got yelled at and if you did it again you got escorted out of the rifle range.

While target practice and skeet shooting were fun, safety was serious.

Over the years I would learn how to shoot an M-16 in basic training in the military, go through a basic combat course to go to Southeast Asia (when we acted like this was a lark, our instructor stopped our drill and said, “For your sake I hope the guys shooting at you were screwing around in their combat course.” It got our attention). When I bought my ranch, herds of wild boar still roamed the fields. While we were putting in the miles of fencing to keep them out, I bought much heavier weapons to deal with a charging 400-pound boar and hired an instructor to teach me how to safely use them. Each time gun safety was an integral part of training with new weapons. For me, guns and gun safety became one and the same.

Hacking and Cyber Security

For consumers, online surfing, shopping, banking and entertaining ourselves have become an integral part of our lives. And with that has come identify theft, hacking, phishing, online scams, bullying, and predators online. As well as a loss of privacy.

But for businesses, the threats are even more real. Go ask RSA, Northrop, Lockheed, Google, Amazon and almost every other company with an online presence. Intellectual property stolen, customer data hacked, funds illegally transferred, goods stolen, can damage a company and put them out of business.

I think we’re missing something.

In the last 20 years three billion people have gained access to the Web. Yet for most of them safety online remains a problem for other people. It pretty clear that for a company going online today is equivalent to playing with a loaded gun. The analogy of comparing the net with guns might seem stretched, but I think it’s an apt one. Guns have been around for hundreds of years, to provide food as well as wage war, but it wasn’t until the 20th century that gun safety rules were codified and taught.

I think we need the equivalent of gun safety training for online access.

We now know the basic tools online hackers use. We know enough to harden sites to stop the simple hacks and to educate employees about basic social engineering and phishing attempts. It’s time to teach cyber security as integral part of the high school and/or college curriculum—not as an elective.Companies need to make cyber security education an integral part of their on-boarding process.

The Air Force Academy basic Cyber Security course is a good place to start (Stanford and other schools have a similar syllabi). The class consists of basic networking and administration, network mapping, remote exploits, denial of service, Web vulnerabilities, social engineering, password vulnerabilities, wireless network exploitation, persistence, digital media analysis, and cyber mission operations.

Lessons Learned

• The web is not a benign environment
• Companies, high schools and colleges ought to make a basic cyber security course a requirement of getting online access.

After President Obama signed the JOBS Act more than a year ago, Ethan Senturia says he studied the provisions for crowdfunding startups under Title III, and came to the conclusion that it would be more trouble than it was worth.

Today crowdfunding boosters are still waiting for regulators at the Securities and Exchange Commission to devise the rules needed to make investor crowdfunding work. Meanwhile, Senturia and computer scientist Russell McLoughlin are building Dealstruck, a San Diego startup that serves as a kind of Kickstarter for business debt.

Instead of crowdfunding by raising investment capital, however, Dealstruck operates an online marketplace that matches qualified small-to-medium businesses with lenders made up of rich people who meet the qualifications of individual accredited investors. The investors are basically providing loans instead of making equity investments. With the Dealstruck online exchange, Senturia contends that profitable and growing businesses can get affordable loans on fair terms, with a minimum of administrative hassles. At the same time, individual investors can earn attractive returns while putting their money to work in the local economy, he says.

Ethan Senturia

“We looked at Title III pretty closely,” says Senturia. “There’s a lot of friction and costs associated with it. You have to get your financials audited by a [certified public accountant], and you have to make certain disclosures to the SEC. We said, ‘Let’s try to create a framework that operates under existing rules and regulations, and that doesn’t come with the regulatory burdens of the JOBS Act.’”

Senturia and McLoughlin started Dealstruck last year, and made an auspicious showing in the fall at the San Diego Tech Coast Angels’ Quick Pitch competition (winning the “best pitch” award) and as a semi-finalist at the San Diego Venture Group’s 2012 PitchFest. Dealstruck already has counted $1.5 million in commitments from more than 40 individual investors, Senturia says. The first loan request to be posted on the Dealstruck website, for a $250,000 business loan, was funded in five days, with 21 individual lenders participating.

Angel investors also provided Dealstruck’s startup capital, although Senturia would not say how much has been raised so far.

The startup faces some stiff competition, however. Aside from traditional banks, (which are ready to be disrupted, according to Senturia), Dealstruck must differentiate itself from … Next Page »

Yesterday, we ran the first part of a wide-ranging interview with Henri Termeer, the legendary biotech entrepreneur and former CEO of Cambridge, MA-based Genzyme. He spoke about what kinds of startups he likes to get involved in, the trend toward drug companies working on rare diseases, and efforts to repair pharma’s damaged reputation.

Today, he speaks in more depth about specific lessons from his final days at Genzyme.

Xconomy: I’d like to switch gears here for a second. Now that you’ve had some time to reflect, a couple of years have gone by since you left Genzyme, have you spent time reflecting on what happened to the manufacturing at Allston? Were there any lessons learned there, which you are taking forward?

Henri Termeer: Yes. The lessons learned, when this happened, we were short on manufacturing capacity because we were having very early success with a product called Myozyme for Pompe disease. A deadly disease, and it got approved very broadly, very early. In Europe, we utilized excess capacity we had in one plant while we were building new plants. While we were putting more through that one plant, we created a condition that reduced the provision of inventories for other products, and also quality concerns. We had too many things happening at one time. There was too much stress on the plant. In the middle of that, as inventories were low, we were hit by a virus. It was difficult.

You’re probably familiar with the Black Swan concept. It was our Black Swan. We had never had a virus in our plants. We hadn’t calculated that in, in terms of the need for inventories we’d need to recover from such a condition. When it hit, and we had to close down the plant, it was extremely painful. The second part was just as painful. Not only did we have to close down the plant, we had to take it apart. When we took it apart, we, of course, had to put it back together. And the productivity at the plant was very slow in coming up to the productivity we had before we closed it down.

Henri Termeer

When we recovered, we recovered very slowly. The plant just didn’t come up the way we had hoped. The new plants, meanwhile, were being completed. A new plant in Framingham, MA was completed shortly after Sanofi took over. Currently, we see Genzyme recovering in a very important way. It’s very interesting. Genzyme had that interruption, in a marketplace that was connected very closely, passionately, to Genzyme. But we couldn’t support all patients with the appropriate dose.

Competition came in during that period of time. The competition was in the process of coming for decades before this happened. You would have thought that Genzyme would have lost all its market share. It certainly would have been the case with some broad-based products. Generic products tend to take over very fast when they come in, on price. But Genzyme didn’t lose its market share. Last week when Sanofi announced its results for Genzyme, they were up 25 percent. They are regaining, continuously, in the market.

X: Are you still upset about what happened? Would you still be the CEO of Genzyme if this virus hadn’t hit Allston?

HT: I don’t speculate. Sanofi’s interest was of a strategic nature. That interest would have been there, independent of this. I can’t predict what would have happened without it. But the lesson here is if you get a condition of this kind, where you have products coming to market very early, manufacturing is something that has to keep up. Things can happen that may never have happened before. It happened to us. It was a setback.

X: How has that experience influenced you, and how might it affect the advice you provide to other entrepreneurs going forward?

HT: I know of many risks out there. This is part of what you do, you manage risk. The unexpected risk makes me very aware that amazing things can happen. You can think ahead to build in some protection. In this case, it would have been inventories.

X: Any chance you’ll take an operating role again in a biotech company?

HT: I kind of doubt it, because … Next Page »

Because it’s often so difficult for entrepreneurs to obtain seed funding for their startups, bootstrapping is one of the best methods to self-fund their projects. And offering a service is one of the best ways to go. This, by the way, remains a controversial point of view, and most industry observers will take the position that companies get distracted if they try to bootstrap a product with a service. At 1M/1M, we take a pragmatic and contrarian position, and back it up with numerous case studies. From where we sit, bootstrapping products with services is a tried and true method.

RailsFactory, a consulting and app development company that provides solutions for the web application framework Ruby on Rails, was co-founded by Senthil Nayagam and Dinesh Kumar in 2006. RailsFactory provides numerous services—primarily focusing on app development for the Ruby on Rails platform, but also including Rails version migration, e-commerce solutions, e-mail campaign system implementation, and iPhone and Android app development.

Senthil and Dinesh bootstrapped RailsFactory themselves, starting with about $1,250 in seed money. When they needed to, they each utilized other personal resources: Senthil reached into his savings, and Dinesh turned to his parents. But they started generating revenues fast—thanks to the services they offered, they were generating revenue by their second month, and they’ve been growing since. To date, RailsFactory has executed over 100 projects and has worked with clients in the US, Canada, India, Australia, Singapore, and the UK. Their services revenues have crossed a couple of million dollars, and the company has recently built a product that they have started validating with those 100 services customers. The productized offering enables them to offer a support package to the small- to medium-sized enterprise segment based on packs of trouble tickets.

Similarly, Mansa Systems is a SaaS-based IT company, founded by Siva Devaki in San Francisco in 2006. Siva founded Mansa Systems to focus specifically on cloud computing. Currently, Mansa publishes a number of apps to be used in conjunction with Salesforce.com through Salesforce’s AppExchange app marketplace.

AppExchange allows partners to create apps to enhance Salesforce for business, and Mansa Systems currently offers eight different apps for Salesforce. Each of the apps is designed to address a limitation with Salesforce; for example, cloud storage app Cloud Drop gives users additional cloud storage space, MassMailer allows users to circumvent Salesforce’s bulk e-mail limitations, and EaglEye provides Salesforce users with secure, trackable document filesharing. Mansa Systems remains entirely self-funded via the company’s service business, and there are currently no plans to use outside funding. The company already has achieved $2 million in annual revenue, and enough profitability to be able to develop and launch its apps at a steady clip.

AgilOne, a company that provides cloud-based predictive customer analytics, was founded by Omer Artun in 2006. Initially, the company relied entirely on services to get close to customers, understand and address their problems, and in the process generate revenues. Today, AgilOne’s product is a software-as-a-service platform. Much of what the company learnt about its customers in the services mode has been productized, although a percentage of revenues still comes from services.

AgilOne’s platform is designed to make it easier for companies to see how their customers are interacting with their products. For example, a company’s online retail customers can be broken into different “clusters” based on their search and shopping preferences. These clusters then enable the company’s marketing department to more accurately target those users with specific promotions.

Omer bootstrapped his company from no revenue or employees in 2005 to about 45 employees and over $15 million in revenue by the time AgilOne partnered with Sequoia Capital in 2011. Silicon Valley’s top venture firm made a sizable investment at a high valuation in a company that was bootstrapped using services.

I have often heard that capital intensive businesses are difficult to bootstrap. There is some truth to this observation. However, Finisar offers the counterpoint.

Finisar produces optical communications components and subsystems and was founded 25 years ago by Jerry Rawls and Frank Levinson. Jerry and Frank bootstrapped Finisar by first providing consulting services while doing product development in high-speed fiber optics for computer networks. They searched for a need in the computer industry that wasn’t filled, and discovered that need in the early 1990s when they … Next Page »

Henri Termeer could have easily faded away into obscurity a couple years ago. The biotech pioneer could have relaxed at his oceanside home in Maine, played a little golf. Or, if he wanted, he could have made loads of money at a private equity firm.

Certainly, he didn’t need to mess around with hungry little biotech startups nobody has ever heard of.

At 65, Termeer had more money than anyone could reasonably spend, thanks to the more than $100 million fortune he amassed at Cambridge, MA-based Genzyme. His place as one of the key mover/shakers in biotech history was secure. He will always be known as the guy who figured out how to build a great business by making drugs for rare diseases. Legions of his protégés had moved on to lead other companies, greatly extending his influence. Genzyme grew to 10,000 employees under Termeer’s watch.

While he could have stopped there, Termeer also had reason to write a different closing act to his career. The final days at Genzyme had taken a toll. The company he built and loved was caught flat-footed in a manufacturing crisis in Allston, MA, that erupted in June 2009. That disaster created shortages of Genzyme drugs that people depended on, sparking an angry backlash among patients and shareholders who saw irresponsible, or arrogant, corporate behavior. The crisis prompted the FDA to levy a $175 million fine for the manufacturing deficiencies it saw at Genzyme. Competitors exploited the opening. Genzyme’s sagging stock price made it vulnerable to an unsolicited takeover, which ended in a $20 billion sale to Sanofi in February 2011.

Two years later, Termeer sounds like a man who’s come to terms with the Allston disaster, and is mapping out a second career. He’s landed on a bunch of boards, allowing him to provide advice and insight, without having to shoulder all the day-to-day operating burdens of a CEO. He’s on the boards of MIT, Massachusetts General Hospital, and Harvard Medical School, and gets his biotech fix on the boards of Verastem (NASDAQ: VSTM), Abiomed (NASDAQ: ABMD), and Aveo Oncology (NASDAQ: AVEO). More recently, he joined the board of privately held Moderna Therapeutics, shortly after it inked a $240 million upfront cash partnership with AstraZeneca. He’s advised a few startups, and gave away $10 million to Massachusetts General Hospital to start a personalized medicine initiative.

Henri Termeer

The guy clearly still has a lot of energy, and isn’t ready to walk away from biotech.

Last week, I spoke with Termeer by phone for a wide-ranging interview about his latest startup pursuits, and thoughts on some of the biggest issues facing the industry. Here’s the first part of the conversation. Look for the second half here tomorrow, as Termeer reflects more specifically on the turmoil at the end of his run at Genzyme.

Xconomy: You joined the board of Cambridge, MA-based Moderna Therapeutics a couple weeks ago, right after it got a huge deal done with AstraZeneca for its messenger RNA drug technology with $240 million in upfront cash. What attracted you to this company?

Henri Termeer: I was familiar with the company because I have worked with Stephane [Bancel, the CEO of Moderna] before. From the beginning, a year and half or two years ago when I got introduced to it, it was a very fascinating possibility. It kept on proving itself. It’s a different way to introduce proteins into the body through synthetic RNA. For me, it was about the people involved, the possibilities, the early-stage nature of it, the significant financial muscle behind it, and the local part. I do a lot of things in Cambridge. I can really be involved without having to sit on planes.

X: I saw you spoke to the Boston Globe a couple months ago, and you said something about how you’re free now and can get a lot more done. What do you mean by that?

HT: When you run a company, and build a company, you have many balls in the air. It’s similar to what I have going on currently. But you have the structure and discipline of a company when you’re responsible for it. It ties you down. You just have to do the work. You have to do the quarterly things. You are very intimately involved with any transactions. It’s an enormous, 24/7 kind of activity. Genzyme was continuously in motion. It was intense for 30 years.

I always had interest in the outside world. I was part of the Federal Reserve, and MGH and MIT and other places. But I did much less. I’d go to board meetings and would run some meetings, but it was different. I didn’t have any time then. Now, I have all the time, and I don’t need … Next Page »

Eight seed-stage tech companies were selected late yesterday to be the first class of startups from San Diego to be admitted to the 10-week business technology accelerator program established by Silicon Valley’s Plug and Play Tech Center.

Every company admitted to the Plug and Play Startup Camp is eligible to get a $25,000 investment as part of the initiative, which was organized late last year by San Diego’s StartupCircle and Alex Roudi, a San Diego real estate investor.

The Plug and Play Tech Center, which Xconomy’s Wade Roush profiled in December, has been considering an expansion in San Diego for several years. Saeed Amidi, the founder and CEO, says he came close to acquiring a building here several years ago to serve as a tech incubator for Southern California. More recently, though, Plug and Play has simply expanded its recruiting efforts beyond Northern California, offering startup capital, business mentoring, and exposure to Silicon Valley VCs to startups willing to participate in its program. Amidi told me yesterday he had recently returned from a recruiting trip that included Berlin and Switzerland.

The inaugural San Diego Startup Camp will begin with once-a-week business mentoring sessions in San Diego, followed by a 10-week program at the Plug and Play headquarters in Sunnyvale, CA. The camp culminates with a “Demo Day” that enables startups enrolled in the program to pitch their businesses to scores of venture capitalists.

More than 70 companies applied for the program, and 16 finalists were selected to make 3-minute presentations yesterday, according to Startup Circle’s Gabriela Dow. She confided that organizers were unsure whether any San Diego companies would be … Next Page »

Not every speech is improved by visual aids. Abraham Lincoln made do without PowerPoint at Gettysburg (though wags have tried to reimagine that), and Franklin Roosevelt’s voice on the radio in 1933 calmed a nation rattled by the Great Depression and cemented the New Deal.

But there’s high oratory, and then there’s the old-fashioned presentation, where the setting is usually no larger than a boardroom or lecture hall and the point is simply to enlighten, persuade, or entertain your listeners. In those situations, thoughtful visuals can have a big impact. No meeting between a startup entrepreneur and a potential investor would be complete without a chart showing that everything is going up and to the right, and nobody would remember statistics guru Hans Rosling’s 2007 TED talk if he hadn’t used his fancy Trendalyzer visualization software.

Sooner or later, you too will be asked to give a talk to a live audience, whether it’s your customers, your boss, your Girl Scout troop, or the local PTA. And chances are you’ll want to make some slides to go with it.

The good news is that there have been some big improvements lately in the world of presentation software. Microsoft and Apple continue to upgrade old standbys like PowerPoint and Keynote, which are now available in tablet-friendly form in addition to the traditional desktop versions. But even more encouraging, some new challengers are emerging. My colleague Ben Romano wrote recently about Seattle-based Haiku Deck, whose iPad app lets you build simple presentations around meaty bits of text and big, beautiful visuals. And lately I’ve been getting to know Prezi, a five-year-old, 130-employee startup with dual headquarters in San Francisco and Budapest, Hungary.

One of the first things that Prezi CEO and co-founder Peter Arvai tells any visitor is that despite the company’s name, “We don’t think of Prezi as a presentation tool.” To its creators, Prezi’s Web-, desktop, and tablet-based software—whose distinctive feature is its zooming interface—is all about telling stories, communicating ideas, and facilitating conversations.

Prezi co-founder and CEO Peter Arvai, on the roof deck of the company's San Francisco office building.

But in real-world offices and classrooms, Prezi usually turns up first as an alternative to older, more linear digital-slideshow tools, and only then do users begin to discover more uses for it. That’s why I think it’s fair to talk about Prezi as part of a centuries-long lineage of presentation technologies, going back to the blackboard and the magic lantern and continuing all the way up to PowerPoint and Keynote.

The central innovation at Prezi was killing off pagination—the idea that a presentation should be a sequence of static pages or slides. Every prezi (the company’s lowercase noun for a presentation made using Prezi) starts with an infinite two-dimensional plane or canvas. Storytelling elements like text, pictures, or video can go anywhere on this plane.

Creating a prezi is basically a process of finding or creating the right elements, laying them out in some meaningful pattern, and then drawing a narrative path between them. During an actual presentation, the virtual camera’s viewpoint pans or zooms to each stop on the path, with all transitions handled by the Prezi animation engine.

It’s easier to show than to explain. Watch a bit of this video tutorial and you’ll get the idea:

I’m not yet a Prezi pro, but I’ve spent enough time immersed in the software over the last couple of months to see that it offers an unusual combination of power and simplicity.

Here’s the quick backstory: as early as February, I’d been considering using Prezi for a big talk I was preparing on the technology of storytelling. Then I visited Arvai at Prezi’s San Francisco office in early March, and we spent most of the interview talking about how today’s visualization technologies help people tell stories in more compelling and memorable ways. I went home more convinced than ever that Prezi was the right medium for my message, and that I should learn the software. Which I did—and you can watch the resulting talk here. Entitled “Stories About Storytelling: A Personal Journey in Technology,” it was part of the PARC Forum speaker series at the Palo Alto Research Center. (The Leonardo da Vinci image above comes from my prezi.)

[Updated 5/10/13] Today Prezi has 23 million registered users. But Arvai and his co-founders—who raised almost no outside money until 2011, when they collected $14 million from Accel Partners and Sunstone Capital—didn’t set out with much of a business plan or an aggressive mission to disrupt the incumbents in the presentation-tools industry. “It did not come from an analysis of how the market was tired of boring PowerPoints, or how we could impress people,” Arvai says. “We just saw that when people interacted with Prezi, it was like some visual passion had been lit. It was very emotional reasoning.”

The original inspiration for Prezi grew out of a 2001 project by Adam Somlai-Fischer, a Hungarian-born architect, artist, and programmer. “Adam was spending most of his time creating these stunning art projects, and one of them was … Next Page »

Amid the hectic pace of earnings releases, we saw a number of partnership agreements and other developments coming out of San Diego’s life sciences community.  Here’s my wrap-up.

—Shares of San Diego-based Receptos (NASDAQ: RCPT), a biotech developing new treatments for immune disorders, began trading on the Nasdaq exchange this morning after the company said it had priced a bigger-than-expected IPO at $14 a share. The company raised $73 million by offering 5.2 million shares, an increase from its planned offering of 4.7 million shares. Receptos granted its underwriters a 30-day option to purchase up to an additional 780,000 shares to cover any over-allotments.

—Another San Diego biotech, cancer drug developer Ambit Biosciences, is waiting in the wings for its IPO debut. Ambit, which would trade on Nasdaq under the ticker symbol AMBI, plans to raise $65 million by offering 4.6 million shares at a price range between $13 to $15.

—San Diego’s Arena Pharmaceuticals (NASDAQ: ARNA) and its partner Eisai Pharmaceuticals of Japan said they can begin sales of lorcaserin (Belviq) as a treatment for obesity (in addition to diet and exercise) next month, after winning final approval from the DEA. In giving its approval to lorcaserin last year, the FDA recommended a DEA review last year to help prevent abuse of the weight-loss drug. Arena failed to win FDA approval for lorcaserin in 2010. The DEA rated lorcaserin as a Schedule 4 controlled substance, which carries a relatively low risk of abuse. Eisai also will pay Arena a $65 million milestone payment due under their partnership agreement.

—The Scripps Research Institute (TSRI) said it signed a five-year agreement with Janssen Pharmaceuticals to collaborate on infectious disease research and discovery, with an initial goal targeting … Next Page »

The healthcare industry is slow moving. While beginning to adopt technology for logistical issues including electronic medical records and appointment scheduling, the focus of these efforts is narrow and off-base. True impact on human health now requires technology architecture which addresses the critical data issues faced by the healthcare industry today.

Over the last 10 years the healthcare data dilemma has unfolded to the detriment of the patient. The sad statistic: A primary care physician spends an average of 11 minutes with each patient. Currently, more than half of all patients do not get the recommended treatment necessary for their condition. More alarming; a staggering 40 million patients each year are faced with the potential consequences of delayed or inadequate care due to critical, missing information such as historical examinations, test results and medical reports.

Ironically, at the same time, medicine is experiencing its greatest advancements in human history. Over 34,000 new references are added to the National Library of Medicine every month, more than 500,000 new medical articles are published each year, and there are more than 100,000 scientific journals currently in publication. There are 30,000 new clinical trials funded each year; more than 50 starting every day, somewhere in the world.

What becomes of this unprecedented wealth of information? While a good deal of it might be available, it is generally not truly accessible as it lives behind paid subscription firewalls. Assuming a general practitioner paid for access to all the information available today (fiscally not feasible), staying current would still be impossible. If the practitioner were to spend just five minutes reading each new article published on primary care, this would amount to a ridiculous 600 hours each month.

So where does that leave the patient?

For the patient to be justly served, the healthcare industry must be open to a new model; leveraging the technology, scientific and academic communities. The new model enables engagement across all elements of human health; applying the most current findings from research and clinical studies worldwide to the results of individual patient data analysis, including genomic variation and metabolic functions, to achieve the best possible outcome for their health conditions. The new model enables doctors to partner with researchers, statisticians and mathematicians to collaboratively review and impact patient evaluations and treatment recommendations, providing a truly global, comprehensive and efficient healthcare experience. The new model is transparent and accessible for patients, engaging them in a pro-active way. Imagine the impact this strategy could have in the case of a serious illness; patient outcomes could potentially be dramatically changed.

Patients themselves seem more comfortable with the new model than the healthcare industry. With sites like www.patientslikeme.com booming it is clear that there is a desire by patients to have more information driven by technology. Patients are becoming smarter and more empowered and are taking matters into their own hands.

Innovation in the healthcare industry has been left in the hands of the well-meaning but ill-equipped healthcare people; doctors, nurses and administrators, whose expertise lies in treating and facilitating the care of patients, not technological architecture. In today’s environment, people alone are unable to manage this information overload; unable to take advantage of the wealth of scientific data available. As a result, the medical industry is failing the patient; depriving them of the best potential outcomes, while the solutions continue to lie just out of reach. It’s time for the new model.